Research On The Risk Management Of New-Type Rural Financial Organizations

Compared to the traditional regular rural financial institutions, new-type rural financial institutions was born as a novelty under the background of the reform of rural financial system in2006The Several Opinions on adjusting flexible policies for rural financial institutions’Banking Market Entry with the aim of supporting the socialist construction of new rural area issued by China Banking Regulatory Commission clearly defines, rural financial market opens to all the social capital like the banking capital at home and abroad, industrial capital, non-governmental capital, which can be invested in the rural area for the establishment of new-type banking organizations like village or county banks, small-sum loan companies and fund cooperatives in rural area. During the last few years, the flexible policies for banking market entry of rural financial institution boosted the development of new-type financial organizations like village or county banks, small-sum loan companies and fund cooperatives all over China, meanwhile, regulates and guide the civil loan and fills in the blanks which small and medium enterprises financing with the satisfactory of vast farmers on the urgent financing demands on agricultural production so as to be the major supplement to the rural financial market which is narrowing the financial gaps between urban and rural areas and improving efficiently the financial service to rural area and exert a great positive effect on the development of rural economy As of end-2011,786new-type rural financial institutions have started operations (including726village banks,10lending firms and50rural fund cooperatives), the number of unbanked towns and townships all over the China has dropped to1696, which is the great breakthrough on covering unbanked towns and townships network. However, in the actual business operation, the risks of new-type rural financial institutions are becoming more and more prominent, then how to solve the risks and strengthen the management is becoming the pending key point of improving its healthy development. therefore, in a practical sense, we have to analyze the risks which new-type rural financial organizations are facing with and sort out the problems in the risk-management and understand the mechanism generated by the risks of new-type rural financial organizations so as to establish the risk-management system for new-type rural financial organizations and prepare the precaution and solution to the problems during the risk-management.As per the course of Chinese new-type rural financial organizations’development and the current situation of risk-management, the paper mainly uses the method integrating theory and practice, methods based on the combination quantity and quality analysis, comparative analytic approach, the analysis of documentation and questionnaire to explain the problems in the risk-management of new-type rural financial organizations, the general body of the paper is the following.1) The Basic theory of risk-management of new-type rural financial organizations. This section mainly explains the relative concepts and basic theory of risk-management of new-type rural financial organizations. firstly, it defines the concepts, types, the connotation and general strategy of the risk management of new-type rural financial organizations, then states about the methods of the risk management and the connotation of the risk-precaution theory of new-type rural financial organizations, which lay the theory basic for the whole paper.2) The current development of Chinese new-type rural financial organizations and the analysis on the risks which they are facing with. This section firstly analyzes the current situation of new-type rural financial organizations with the review and summary of the course of new-type rural financial organizations’ development, especially summarizes and analyzes the risks which new-type rural financial organizations are facing with so as to point out and improve the significances of the risk management of new-type rural financial organizations.3) The analysis on the problems in the risk-management of Chinese new-type rural financial organizations. This section discussed about the problems in the risk-management of new-type rural financial organizations in China. Based on that, analyzes separately on the problems in the risk-management during operating of new-type rural financial organizations and on the Defects in the Risk Management Methods on the Traditional Credit in New-type Rural Financial Organizations, the Internal Governance Mechanism is so Weak that it could not adapt to the further development of New-type Rural Financial Organizations, the Supervision and Regulations are not perfect and Supervision System is Vacant, that’s why it is so necessary to improve and strengthen the risk management of new-type rural financial organizations.4) The Empirical analysis of the risks evaluation of new-type rural financial organizations in China. This section defined the risks evaluation of new-type rural financial organizations using hierarchy analysis to comprehensive evaluate the problems of risk-management taking the business characteristics of new-type rural financial organizations and data collection into consideration, then set example analysis on the establishment of Run Sheng Village bank of Longjiang Bank in Ke Dong County and offering the suggestion on the initial risks control and precaution.5) The Risk-Management Modes of Foreign Small Rural Financial Organizations and Its Referential Experiences. This section analyzes the operating modes and risk-management modes of similar-type rural financial organizations in developed countries and developing countries and summarizes the differences and similarities of the risk-management of international new-type rural financial organizations and offering the enlightenment and references to new-type rural financial organizations in China and its risk-management.6) The establishment of the risk-management system for new-type rural financial organizations in China. This section offers the basic principle and thoughts of the establishment of the risk-management system, The logic Structure of the risk-management system, the topology Structure, The platform Structure, the data process, the information transfer and the safety management etc. to structure and design the risk-management system of new-type rural financial organizations.7) The counter-measures and suggestions on the risk-management for new-type rural financial organizations in China, This section offers the relative suggestion on establishing and perfecting the Internal organization and the internal control system and enhancing the quality of the whole working staffs in the new-type rural financial institutions and innovating the Financial service tool for new-type rural financial institutions and exerting the advantages on the competition so as to strengthen the abilities on the risk-prevention and banking supervision department improve the supervision level, government strengthen the function to interfere in a proper way.The paper is of theoretical significance and practical significance, its theoretical significance is the following:First, benefits for supplement to perfect the theory of Chinese rural financial risks. the paper focus on the research of the risk-precaution of new-type rural financial organizations, with the establishment of the risk-management system of new-type rural financial organizations to perfect further as supplement the theory of Chinese rural financial risks; Second, benefits for the research on the problems of risk-controlling of new-type rural financial organizations, the paper using quantitative analysis on the risk of new-type rural financial organizations so as to offer more references to the risk-management of new-type rural financial organizations. Its practical significance is the following, First, benefits for improving business-operating level of new-type rural financial organizations and strengthening the abilities of recognizing and solving the risk of new-type rural financial organizations for its sustained development; Second, benefits for the development of rural financial market and competitiveness of new-type rural financial institutions and efficiency of rural financial service, activating rural financial market and better rural financial service to solve the difficulties in doing the loan for farmers. The innovation points should be as the following:First, using hierarchy analysis to give comprehensive evaluation on the problems of risk-management and make sure of basic theory and course of risk-evaluation, taking the business characteristics of new-type rural financial organizations and data collection into consideration to choose one specific village bank as an example to carry out the Empirical analysis, through the classification of the index sign of risks evaluation and hierarchy analysis procedure which decided by the weights of the index sign, multilevel fuzzy comprehensive evaluation to offer some suggestion&plan on the risks-precaution and control. Second, offered the basic principle and thoughts of the establishment of the risk-management system, The logic Structure of the risk-management system, the topology Structure, The platform Structure, the data process, the information transfer and the safety management etc. to structure and design the risk-management system of new-type rural financial organizations and offer some references on the risk-management practice of new-type rural financial organizations.